Bloomberg News

San Francisco Airport Sells $483 Million After Crash: Muni Deals

July 15, 2013

San Francisco International Airport, where a Boeing 777 crashed this month, plans to sell $483 million of bonds to be paid off by terminal rental, landing fees and revenue from parking and concessions.

The money will help the airport, which served about 43 million passengers in fiscal 2011-2012, construct an air-traffic control tower and improve baggage-inspection systems. It will also refinance $180 million in debt. The facility, which last sold debt in November, approved a five-year $2.1 billion capital plan in May. This sale is its first stage.

The bonds have an A1 grade from Moody’s Investors Service, the fifth-highest level. The ratings company has a stable outlook on the airport, citing a “strong market position for air travel” in the region. The Airport Commission of the City & County of San Francisco is issuing the debt.

“It will be received well in the sense that San Francisco has not been to market for new-money bonds since 2009,” said Kevin Kone, the assistant deputy airport director. “We’ve been reaffirmed by all three rating agencies with a stable rating, so we think there should be good demand out there.”

Performance Takeoff

Airport bonds are beating the rest of the municipal market as carriers’ stock prices are close to the highest since 2007 and a growing economy spurs travel.

Debt sold by airports has lost 2.9 percent this year as of July 11, Bank of America Merrill Lynch data show. That’s less than the 3.3 percent decline of the broader market.

Offering documents mention the Asiana Airlines Inc. (020560) crash that killed two people and sent more than a dozen to the hospital, saying that the investigation is continuing. Kone declined to comment on how the crash will affect the sale.

The deal will come in five portions, including tax-exempt debt, taxable and some subject to the alternative minimum tax. Airport bonds are commonly subject to the AMT, which ensures that taxpayers pay some federal income tax.

The airport was the seventh-most active in the nation in terms of domestic origin and destination passengers in its fiscal 2011-2012, offering documents say.

To contact the reporter on this story: Emily Freeman in New York at efreeman14@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net


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